The President and the Madman

Ryan Heshmati

February 07, 2025

In just weeks, President Trump has moved swiftly to realize his agenda with a strong reliance on executive orders. From threats of U.S. military action to obtain control of the Panama Canal to signing, and then promptly delaying, sweeping tariffs against American allies Canada and Mexico, the president has surely been busy. Economists widely hold tariffs as bad economic policy, so what is Trump’s endgame? When signing his tariff executive actions, the president rejected the idea that he was using a bargaining strategy, but developments since cast doubt on that position.

After obtaining concessions from Canada, in the form of a border security package, and Mexico, through the deployment of personnel at the border to stop illegal activity, President Trump agreed to a 30-day delay in the imposition of tariffs that for most goods were 25%. It appears Mexico and Canada were uninterested in exploring whether the president was bluffing, likely because of his history of an erratic and extreme decision-making process.

This brings us to Richard Nixon’s madman theory. Despite ending as a controversial president, Nixon, at least to many, was a foreign policy genius. His madman theory relied upon a public perception of volatility and irrationality, with the hope that U.S. enemies would be too fearful of provoking a “madman” president. Knowingly or unknowingly, Trump may be benefiting from a similar type of fear around the globe.

Of course, the change with relying on threats of a “madman” is that without eventual followthrough, eventually, the threats lose the weight necessary to strike fear in the minds of American enemies. Further, it is worth noting that if this is the strategy Trump intended with his tariffs, with the exception of China, the countries are American allies. Perhaps bullying Canada and Mexico on the world stage can extract some short-term concessions, but Trump runs the risk of losing vital partnerships that are far more valuable than what he gains in his deals.

These are just the early days of the second Trump administration. With Elon Musk’s DOGE tenaciously going after domestic spending, it looks like Trump’s focus may continue to be foreign policy. Tariffs, even if not the best economic policy in the view of many economists, were a campaign promise that helped Trump obtain his second term. Considering the interests of Rust Belt factory workers, a group vital to his win, it is very possible Trump truly intends to impose and maintain high tariffs for the long term. Alternatively, however, Trump might just be taking a page from Nixon’s playbook and implementing the madman theory. Global leaders and markets will closely watch Trump in the coming months to find out.